Home Health & Hospice Week

But beware labor law pitfalls of some popular strategies.

Desperate times call for desperate measures -- or at least creative ones.
 
High gas prices are squeezing both home care providers and their employees. "We're all trying to figure out a way to creatively deal with this problem," notes Joie Glenn of the New Mexico Association for Home and Hospice Care.
 
Here are alternative strategies home care providers are using or considering to combat high fuel prices:

 • Geographic scheduling. If you don't do so already, now's the time to schedule your employees' visits very carefully to minimize travel. That's what many Kentucky Home Health Association members are doing, a recent poll shows. "Many agencies are implementing strategies that typically are reserved for emergency situations," KHHA's Karen Hinkle tells Eli. Some agencies are even carpooling for staff going to the same general locale, she says.

 • Gas gift cards. If you don't want to take the leap to permanently increasing your travel reimbursement rate, you can hand out gas gift cards to employees. Connecticut home health agencies are considering that option, reports the Connecticut Association for Home Care's Brian Ellsworth.

 • Group discounts. Check into securing a fleet discount rate in your community, Glenn advises. And some state associations are looking into securing group discounts for all their members.

 • Providing cars. Soaring gas prices will seem even worse for employees driving gas guzzlers like SUVs. Consider furnishing fuel-efficient cars for your employees to use for work ...quot; perhaps for just the most distant patients, Glenn suggests.

 • Add-ons. Rather than change the mileage rate, some agencies are offering a $1 per-visit bonus until gas prices come down, says consultant Judy Adams with Charlotte, NC-based LarsonAllen Health Care Group.
 
Vicki Purgavie of the Home Care Alliance of Maine reports members giving stipends to employees. Some agencies give bonuses by the week or pay period as well as per visit, notes Abilene, TX-based reimbursement consultant Bobby Dusek.

Watch Out for Tax Penalties

But providers should beware of implementing bonuses or add-ons in lieu of mileage increases. "Giving staff a per visit add-on is not a good idea," stresses attorney John Gilliland II with Gilliland & Caudill in Indianapolis. "The add-on would be wages rather than expense reimbursement."
 
That means the amount gets reduced for withholding and taxes on both the worker and employer sides. Any amounts paid to an employee and not substantiated by actual miles are considered taxable compensation subject to income and employment taxes, Dusek explains.
 
And for employees entitled to overtime, an add-on will increase their regular rate for overtime pay calculations, Gilliland warns.
 
"Expense reimbursement should always be stated and reimbursed separate from the person's wages, not made a part of the person's wages," Gilliland counsels.
 
Some providers are reluctant to increase mileage rates because it will be difficult to reduce the rate when gas goes back down. If you're in that boat, you may want to follow the example of one of BKD's clients.
 
Example: This HHA reimburses mileage at a base rate of 33 cents per mile, reports consultant Mark Sharp in BKD's Springfield, MO office. The agency then pays "mileage premiums" based on gas price. When gas hits $2 per gallon, the rate increases 2 cents per mile; at $2.50 a gallon, the rate goes up 4 cents over the base rate; when prices exceed $3 per gallon, the agency adds 6 cents per mile.
 
The agency's staff "have been very happy with this policy," Sharp says. "The staff appreciate the agency 'sharing' in the costs of increasing gas prices."
 
Agencies that choose not to reimburse for travel up to the new IRS limit (see story, p. 258) can counsel their employees to deduct the unreimbursed travel expenses on their taxes, Sharp advises.
 
How it works: Employees report the difference between the agency mileage reimbursement rate and the IRS allowable rate as a deduction on the their personal income tax returns.
 
But the employee must have enough other tax deductions to qualify for itemizing on their personal tax return to take advantage of the work mileage deduction, Sharp admits. "This would exclude many employees."
 
Tip: If agencies decide to give out gas gift cards, they should make sure employees use them only for work purposes, Gilliland instructs. Otherwise, the card amounts must be counted as compensation and taxed.
 
And for fortunate HHAs who can afford to reimburse more than the 48.5 cent rate, remember that any travel amount over the IRS limit also is considered compensation and is subject to withholding and taxes, Dusek adds.